Flexible Mortgages
A flexible mortgage is just that "flexible". It is not unlike a normal mortgage, however it comes with extra features that give it its "flexible" properties.
Interest is calculated daily
One flexibility is in the way interest calculated on your loan. This is done every day and in fact can prove to be the least expensive way a mortgage company can calculate your loan mortgage interest. The other methods mean that your interest is calculated monthly or yearly.
Working out the interest every day can benefit any overpayments you make as the effect to your mortgage balance will happen straight away.
Overpayments
Overpaying allows you to make additional payments above your requested monthly payments. This repayment can either be a lump sum or a regular amount using Standing Orders or increasing your Direct Debit payments. Remember overpaying is optional and stopping making regular overpayments is in your control.
Payment holiday
Taking a break from your payments can often be necessary.
So some flexible mortgages offer the ability to take a payment break. The time length taken is often anything from 1 to 6 months, but check with your lender first as you must be sure before you take a payment break.
Of course you will be required to apply for a payment holiday, don't just stop your payments. If you are accepted it will be based on the length you've had your mortgage for and most likely be subject to the overpaid amounts you have made before you take a payment break.
Finally remember when taking a payment break that the Interest on your loan will still continue so you may see a higher payment due when your payment holiday concludes.
Underpayments
Just as you can overpay a loan, there is the possibility that you will be allowed to underpay a loan. Making a lower payment than you normally would for a set period.
Again this will need prior approval and in most cases will depend upon if you have at some point been making overpayments that cover the amount you are going to miss.
Flexible mortgages are changing all the time and there are bound to be other aspects that are not covered in this short article. So please get in touch with us so we can keep you up to date with all the elements of a flexible mortgage.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.
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